HSBC’s Swiss private banking unit has agreed to pay $12.5m to the US Securities and Exchange Commission (SEC) to settle charges that it violated federal securities laws by providing unregistered cross-border brokerage and investment advisory services to US clients.
The bank’s Swiss unit, HSBC Private Bank (Suisse), failed to register with the SEC before providing advice to American clients and also agreed to admit wrongdoing to settle the SEC’s charges.
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The SEC alleged that HSBC’s Swiss unit amassed as many as 368 US client accounts and collected fees totaling approximately $5.7m.
SEC said that its employees traveled to the US at least 40 times to solicit clients, provide investment advice and make securities transactions without being registered.
The HSBC unit decided to exit the US cross-border business in 2010 and moved or closed most of the accounts by the end of 2011, the SEC added.
The firm tried to manage and reduce the risk by implementing certain compliance initiatives as well as by establishing a dedicated North American desk to combine its US client accounts.
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By GlobalDataAccording to SEC, the internal reviews on HSBC Private Bank revealed multiple occasions when US accounts that were expected to be closed under certain compliance initiatives remained open.
Andrew Ceresney, director of the SEC’s Division of Enforcement, said: "HSBC’s Swiss private banking unit illegally conducted advisory or brokerage business with U.S. customers. HSBC Private Bank’s efforts to prevent registration violations ultimately failed because their compliance initiatives were not effectively implemented or monitored."
